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katrin [286]
3 years ago
7

L Corporation produces and sells 15,100 units of Product X each month. The selling price of Product X is $21 per unit, and varia

ble expenses are $15 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $72,000 of the $101,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice $10,400 ($61,600) ($39,400) $39,400
Business
1 answer:
swat323 years ago
8 0

Answer:

If Product X is discontinued, the company’s overall net operating income would: increase by $61,600

Explanation:

                                          Not drop        Drop       Difference

Sales                                   317,100                           317,100

(15100*21)

Less: Variable expenses   <u> 226,500</u>                         <u>226,500 </u>

(15,100 * 15)

Contribution margin            90,600                          90,600

Less: fixed expenses          <u>101,000</u>       72,000      <u>29,000 </u>

Net operating income      <u>-$10,400</u>                         <u>$61600</u>

<u></u>

Conclusion: If Product X is discontinued, the company’s overall net operating income would: increase by $61,600

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<h3>What is procedural unconscionability?</h3>

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